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How to Negotiate
Negotiation Fundamentals
Negotiation Preparation: What to Do Before Negotiation
Negotiation Strategy
Negotiation Procedure and Structure
1
Relationship between key steps
in the preparation process
Goals
-The Focus That Drives a Negotiation Strategy
Strategy
-The Overall Plan to Achieve One’s Goals
3
Negotiation Planning Guide
6.Who are my constituents and what do they want me
to do?
7.Who are the opposing negotiators and what do they
want?
8.What overall strategy do I want to select?
9.What protocol need to be followed in conducting this
negotiation?
4
Chapter 3:
Negotiation Strategy
5
1.Negotiation: Different Strategies策略
Integrative Negotiation
(Creating Value)
Distributive Negotiation
(Claiming Value)
6
Strategy, Tactics or Planning
Strategy: The overall plan to achieve one’s
goals in a negotiation
Tactics: Short-term, adaptive moves
designed to enact or pursue broad strategies
Tactics are subordinate to strategy
Tactics are driven by strategy
Planning: The “action” component of the
strategy process; i.e. how will I implement
the strategy?
7
Strategy: as compared to tactics
8
Donald Trump’s Advice to negotiators:
Be Strategically Dramatic
Highly recommended TV series: The Apprentice (13
Episodes)
9
TV series: The Apprentice (13 Episodes)
“Negotiation is a very delicate art. Sometimes you have to be
tough; sometimes you have to be sweet as pie—it depends
upon who you are dealing with” (Episode 3).
“In negotiations, try and figure out your opponent” (Episode 6).
Negotiating skill is a communication competency involving
elements of interpersonal communication, audience analysis,
and persuasive message design.
“Never beg when trying to sell” (Episode 8). Effective
persuasive communication appeals to the interests of the target
and does not project an air of desperation.
10
Discussion
What’s the interests of the two parties in this
negotiation?
What are the issues in the negotiation?
What’s their alternative options?
Is there any criterion for the negotiation? How the
criterion be set?
What process or structure do you think will be
included in a negotiation? What are the implications
you have learnt from this case?
11
The Distributive Bargaining Situation
Question: How Can I achieve most of the bargaining surplus for myself?
The keys:
Discovering the other party’s reservation point
13 Influencing the other party’s reservation point
Key questions in Pie-slicing Strategies
Questions:
1.How do people make sure they reach agreement if the ZOPA is
positive but simultaneously claim as much of the pie as possible?
2. “This is my bottom line.” when the counterparty tells us his or
her reservation point, we are faced with the dilemma of
determining whether the information is valid or not.
Information deficit/ Risk
People frequently settle for outcomes worse than their BATNA
and often reject offers that are better than their BATNA.
14
Distributive
Negotiations
Win Lose
买卖双方同意以下条款达成交易:
单价
This contract Is made by and agreed between the BUYER and SELLER , in accordance with the terms and conditions
stipulated below.
总值
1. 品名及规格
2. 数量 3. 单价及价格条款 4. 金额
Commodity &
Quantity Unit Price & Trade Terms Amount
Specification
锌钡白(Lithophone) 100公吨 CIF法兰克福每公吨800欧元 80000欧元(EUR80000)
硫化锌含量最低28%(ZnS (100M/T) 含佣2%(EUR800 Per M/T
content 28% min.) CIFC2% Frankfurt)
Total: 100公吨 80000欧元(EUR80000)
(100M/T)
允许 溢短装:卖方可多装或少装百分之五,价格按合同单价计算。
With 17 shall be settled at the contract price.
More or less of shipment: 5% More or less , each difference
5. 总值 捌万欧元整
Total Value European Dollar Eighty thousands only.
6. 包装 玻璃纤维(Glass-fibre)袋装,每50公斤/袋
Packing Packing in Glass-fibre bag, 50kg each.
7. 唛头 FRANKFURT
Shipping Marks NO.1—up
L0201263
8. 装运期及运输方式 2011年5月装运,允许分批和转船
Time of Shipment & means of Shipment in May/2011, allowing partial shipment and
Transportation transshipment.
9. 装运港及目的地 大连港装船运往法兰克福
Port of Loading & Destination From Dalian to Frankfurt Germany.
10. 保险 由卖方按中国人民保险公司海洋货物运输保险条款,按发票总值
Insurance 110%投保一切险和战争险。
To be covered by the Seller for 110% of total invoice value against
A.R. and War risks per and subject to the relevant ocean marine
cargo clauses of the People's Insurance Company of China.
11. 付款方式 买方应由卖方可接受的银行于装运月份前30天开立并送达卖方不
Terms of Payment 可撤销即期信用证,至装运月份后第15天在中国议付有效。
The Buyers shall open through a bank acceptable to the Sellers an
Irrevocable Sight Letter of Credit to reach the Sellers 30 days
before the month of shipment, valid for negotiation in China 15th
day after shipment. 18
12. 品质与数量异议 货到港后7天内提出数量异议,30天内提出品质异议。
Quality/Quantity Any discrepancy about quantity should be presented within 7 days after the arrival of
Discrepancy the goods at the port of destination, any discrepancy about quality should be
presented within 30 days after the arrival of the goods at the port of destination.
13. 不可抗力 如发生洪水、火灾、地震等人力不可抗力事故,当事人需于15天内通知对方,
Force Majeure 当事人可免责。
If the shipment of the contracted goods is prevented or delayed in whole or in part by
reason of flood, fire, earthquake or other cause of Force Majeure, the Seller shall not
be liable for non-shipment or late shipment of the goods of this contract. However,
the Seller shall notify the Buyer within 15 days.
14. 仲裁 如发生争议,双方应友好协商解决。如不能协商解决,将争议提交中国国际经
Arbitration 济贸易仲裁委员会,根据该会的仲裁规则进行仲裁。仲裁裁决是终局的,对双
方均有约束力。
All disputes arising out of the performance of, or relating to this contract, shall be
settled through friendly negotiation. In case no settlement can be reached through
negotiation the case shall be then submitted to the China International Economic and
Trade Arbitration Commission, China for arbitration in accordance with its Rules of
Arbitration. The arbitral award is final and binding upon both parties.
15. 备注
Remarks
The Buyer The Seller
Brown 王星宇
(signature) (signature)
19
Price Term in Contract
• Price: Unit Price单价,Total Value总值=单价×数量
• The Unit Price of Commodity:
① A name of currency;② A unit price;③ A measure unit;
④ A trade term;⑤ A name of destination/ shipping place.
折扣价
大米 每公吨 350 美元 CIF 香港
③ ② ① ④ ⑤ 净价
20
Price Terms
•作价原则和方法 •价格构成
•成本和费用 •贸易术语的报价核算
•计价货币
•佣金和折扣
2
1
作价原则和方法
Pricing 作价方法
• Fixed Price固定价格
• Flexible Price暂不固定价格
i.e.在装船月份前40天,以当地商品交易所商品的收盘价为基础加减1.5美元
i.e.由双方在2010年7月1日商定价格
• Floating Pricing滑动价格
Basic Price基础价格+价格调整条款(根据工资、物价等变动调整)
22
价格构成(1)
出口商品价格构成:
成本——指进货成本或采购成本(含税)the factory price
进货成本(含税)=货价+增值额= 货价× (1+增值税率)
实际采购成本=进货成本(含税)-出口退税收入
出口退税收入=进货成本(含税)×出口退税率/(1+增值税率)
费用——国内费用和国外费用
国内费用:国内运费;商品包装费;仓储费;商品检验费;出口
税金;出口关税及出口报关手续费;垫款利息、经营管理费、银
行费用;办理托运、结汇及签发所需单证手续费及其他各种杂费
国外费用:出口运费、出口保险费、佣金
利润——预期收入,一般以成交额为基数计算
23
价格构成(2)
进口商品价格构成:
成本——进口货物的FOB价格
费用——海运或其他运费、卸货费和理货费、保险费、进口税费、目
的港码头捐税、检验费、银行费用、报关提货费、仓储费、国内运杂
费、其他间接费用
预期利润
24
Price Negotiation and Cost Analysis
Price =Cost + Profit
Cost Structure
Fixed Cost:
Fixed costs are costs that must be paid whether or not any units
are produced. These costs are "fixed" over a specified period of
time or range of production.
For instance, wages, factory rent, rates and insurance…
Variable Cost:
Variable costs are costs that vary directly with the number of
products produced.
For instance, the cost of the materials needed and the labour
used to produce units isn't always the same.
A Typical Cost Breakdown for a Shirt
Labor 4.47
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The most commonly asked question
Should I Reveal My Reservation Point?
Should I Lie about My Reservation Point?
Should I Try to Manipulate the Counterparty’s Reservation
Point?
Should I Make a “Final Offer” or Commit to a Position?
27
Case Study:Company Policy
Tom had his parked car totally destroyed by a dump truck. The
car was covered by insurance, but the exact amount Tom could
recover remained for him to work out with the insurance
adjuster.
Questions:
• What is the disagreement
between the two sides?
•What serves as the fair
standard to help solve the
dispute?
Pie-slicing Strategies
Strategy 1: Determine Your Reservation Point, But Do not
Reveal it
In two circumstances you could think to reveal your reservation
price:
Situation 1: You have exhausted your time to negotiate and are
about to walk out without a deal and you sense that the
bargaining zone may be very small or perhaps negative. Prior to
stepping on the plane or leaving the meeting, you might reveal
your reservation price.
Situation 2: You have a great BATNA and an aggressive
reservation price, and you would be happy if the counterparty
matched or barely exceeded your reservation point.
Signal
29
Pie-slicing Strategies
Strategy 2: Assess Your BATNA and Improve it
Alternatives give the negotiator power to walk away from the
negotiation
If alternatives attractive negotiators can:
Set their goals higher
Make fewer concessions
If there are no attractive alternatives:
Negotiators have much less bargaining power
30
Pie-slicing Strategies
Strategy 3: Research the other Party’s BATNA and estimate the
Reservation Point
Strategy 4: Set High Aspirations(Be Realistic but Optimistic)
Negotiator who set high aspirations end up with more of the pie than those who
set lower aspirations. And negotiators whose aspirations exceed those of the
counterparty get more of the bargaining zone.
Strategy 5: Make the first offer(If you are Prepared)
Winner’s curse
Your first offer should not be a range.
Once you put an offer on the table, be patient. It is time for the counterparty to
respond. In certain situations, patience and silence can be important negotiation
tools.
Premature concessions: make more than one concession in a row before the
other party responds or counteroffers. Always wait for a response before
making a further concessions.
31
Pie-slicing Strategies
Strategy 6: Immediately Reanchor if the Other Party
Opens First
Timing
32
Concessions 让步
Concessions are the reductions that a negotiator makes
during the course of a negotiation.
Pattern of concessions:
Unilateral concessions are concessions made one party
Bilateral concession are concessions made by both sides
Magnitude of concessions:
The usual measure of a concession is the amount reduced or added
from one’s previous offer
The graduated reduction in tension (GRIT) model
BH/WH negotiator: began with a tough stance, made few early concessions, and
later made larger concessions
WH/BH negotiator: began with generous concessions and then became tough and
unyielding
Timing of Concessions:
33 Immediate, gradual, or delayed
The most commonly asked question
Should I Reveal My Reservation Point?
not good unless your reservation point is especially good and
you suspect the bargaining zone is small.
Be prepared for the other party to offer you your reservation
point
Should I Lie about My Reservation Point?
Lying is not ethical, it hurts your reputation.
Should I Try to Manipulate the Counterparty’s Reservation
Point?
If you don’t sell your house to us, there will not be another
buyer. Effective?
Should I Make a “Final Offer” or Commit to a Position?
34
This is my final offer.
WIN-WIN Negotiation: Expanding the Pie
1.What is Win-win negotiation?
Win-win is not:
Compromise:
Even Split:
Satisfaction:
Building a relationship
Win-win negotiation really means that all creative
opportunities are leveraged and no resources are left on
the table. We call these outcomes integrative
negotiations.
35
Pie-Expanding Errors
Most Common Pie-Expanding Errors
False Conflict
Fixed-Pie Perception
Strategies that DO NOT WORK
Commitment to Reaching a Win-win deal
Compromise
Negotiators often mistake win-win negotiations for Equal-
concession negotiations,
Focusing on a Long-Term Relationship
Adopting a Cooperative Orientation
Taking Extra time to Negotiate
36
37
WIN-WIN Negotiation: Expanding the Pie
38
People—Separate People from Problem
•Understand the other party:
•put yourself in their shoes,
•not blame them for your problem;
•Control emotion:
•allow the other side to let off steam,
•not react to emotional outbursts;
•Strengthen communication:
•listen actively and acknowledge what is being said,
•speak about yourself, not about them,
•avoid trying to score points and debating them as opponents
Identify interests:
Explore their interests which stood in our way,
Examine the different interests of different people,
Interests: Look at their human needs underlying their
Focus on Interests positions
Not Positions
Talk about interests:
Explain each other’s interests and
showing appreciation,
Be hard on the problem, soft on the
people
43
Pie-Expanding Strategies
Unbundle the issues
Package issues, avoid sequential bargaining
Make multiple offers simultaneously
Invent options for mutual gain
Structure Contingency Contracts by Capitalizing
on Differences
Search for Pre-settlement Settlements and Post-
settlement Settlement
44
Generate Alternative Solutions
Brainstorming
Nominal groups
Surveys
Use objective criteria for standards of performance
Evaluation and Selection of Alternatives
Narrow the range of solution options
Evaluate solutions on:
Quality
Acceptability
Objective standards
Be willing to justify personal preferences
Use subgroups to evaluate complex options
Keep decisions tentative until proposal is complete
Minimize formality, record keeping until final agreements are
closed
Factors That Facilitate Successful
Integrative Negotiation
Trust
Clear and accurate communication
An understanding of the dynamics of integrative
negotiation
Case Study:Company Policy
Questions:
What is the disagreement between
the two sides?
What serves as the fair standard to
help solve the dispute?
Readings
Chapter 3,4, International Business Negotiation—Theory, Cases and
Practices
(中/英文版第三版)白远著 中国人民大学出版社
Weiss, Stephen E. International Business Negotiation in a Globalizing
World: Reflections on the Contributions and Future of a (Sub) Field,
International Negotiation 11: 287–316, 2006.
Chapter 2-4, International Business Negotiation (5th Edition) by
Lewicki
(列维奇)et al. 中国人民大学出版社
Chapter 2-4, The Mind and Heart of the Negotiator(4th Edition)
(汤普森谈判学, 中/英文版) 清华出版社
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